In a late evening announcement yesterday, the finance ministry has exempted newsprint, glazed newsprint and light weight newsprint used for printing magazines from customs duty.

Business Standard reports that the government has also decided to increase the ad rates paid by various government agencies, through the department of advertising and visual publicity, by 15%. In addition to it, the report says, the discount of 15% will also be removed, effectively raising DAVP ad rates by 30%. The paper said an announcement to this effect will be made today.

Acting information and broadcasting minister Anand Sharma said last week that the government will soon announce a “stimulus package” for the media industry, primarily to help the troubled publishing industry, but parts of the package will also benefit the electronic media (TV channels). It’s not clear at this stage if there is more to the stimulus package than these two measures.

Sharma made the announcement last week after meeting with a media industry delegation, including HT Media vice chairperson Shobhana Bhartiya, Business Standard editor T.N. Ninan and Indian Express editor-in-chief Shekhar Gupta.

Exemption of import duty on newsprint has been a long standing demand of the print media industry. Surprisingly, the exemption was not made when the newsprint prices were at the heights of $920 per tonne at the end of last year, and instead has been when the prices have dropped substantially. In April 2008, the customs duty on newsprint was reduced from 5% to 3%. Magazine newsprint had still attracted 5% duty. In September last year, the I&B ministry had also raised DAVP rates by 24%, in what it said was an interim measure.

The timing of the announcement is seen partly as a function of the clout enjoyed by media owners just ahead of upcoming general elections. In the past, I&B officials have countered demands for higher DAVP rates with the argument that once newsprint prices come down, the industry does not lower ad rates for the government. The timing also means that the heavy duty spending on advertising that is about to be unleashed ahead of general elections, will all be billed under higher rates. Once every five years, just ahead of the general elections, various ministries of the government undertake a massive multimedia advertising blitzkrieg tom toming the government’s achievements during the previous term, in a bid to convince voters to reelect the present regime. In 2004, the Bharatiya Janata Party-led NDA government is believed to have spent nearly Rs500 crore on the now infamous India Shining campaign, which the opposing Congress party successfully countered with the Aam Aadmi (common man) campaign in its eventual march to power. 

The measures bring relief on both the cost and revenue side of newspaper operations and the combined effect on the bottom line would be comforting to publishers who are reeling from a slowdown in ad volumes. Through last year, the steady rise of newsprint also sharply cut into publishers’ profitability. The three major listed publishers—HT Media, .(JavaScript must be enabled to view this email address) and Deccan Chronicle—all reported sharp decline in profitability for the quarter ended 31 December.